$400 Rebate Doesn’t Address High Gas Taxes in California

Gas is pumped into a vehicle in Los Angeles on Feb. 23, 2022. Frederic J. Brown/AFP via Getty Images

Commentary

While serving as a state senator, I can still remember working at my district office on a state holiday, one where governmental offices are closed, but the private sector does not observe it and continues to stay open and do business. The phone rang and I decided to answer it.

“I just drove from Arizona to California. Gas is one dollar less per gallon across our border. What is the senator going to do about it?”

I didn’t tell him who I was but indicated that we shared his frustration. I explained that we were hoping to put a module on our senate website to explain the components of the cost of gasoline in California.

He called back a few hours later.

“I’ve been calling all my elected officials and your office was the only one to answer the phone. It took me awhile to figure out that today is a government holiday. Thanks for working and answering the phone. The senator needs to give you a raise!”

Setting the humor aside, it turns out that the super-majority in the state legislature does not want you to know the components of the price of a gallon of gas. So, I authored SB 1074, the Transparency In Fuel Taxes Bill in 2018.

I worked with Ronald Stein, founder and ambassador for energy and infrastructure at PTS Advance, headquartered in Irvine. Here are some of the costs we wanted to point out to consumers while they were acquiring gasoline, explaining the one-dollar additional cost at the pump for every gallon purchased:

• Federal tax
• Excise tax
• State tax
• Local sales tax
• Cap and trade program compliance costs
• Low-carbon fuel standard program compliance costs
• Renewable fuels standard program compliance costs
• Refinery winter and summer reformatting costs

The bill was killed by the Senate Business, Professions and Economic Development Committee, where it fell two votes shy of passing, due to the committee’s Democrat majority.

Now the governor and the super-majority in Sacramento have two embarrassing problems. The first is gas prices are rising too high. The second is that with rising stock market and real estate prices, the capitol is floating in higher personal income tax revenues generated by capital gains from the sales of these appreciated holdings.

Since Gov. Newsom has been the governor, he has been told by the senator from Bakersfield, Shannon Grove, that it is wiser to drill oil in this state than to have it shipped from the Middle East. I guess Gavin believes importation by massive, fossil fuel operated oil tankers generate less greenhouse gases. Wake up, governor. It’s time for an intervention, as Newsom needs another “let’s be real” moment.

Something has to be done about the rising cost of gasoline, as it impacts not only the poor, but those who drive until they qualify for cheaper housing and have lengthy commutes, including many with toll road costs.

What is awkward about having too much in revenues? Let me acquaint you with what is known as the Gann limitation, instituted with Proposition 4 in 1979. California municipal spending cannot rise more than the cost of living combined with population growth. The Golden State has hit this threshold for the upcoming fiscal year of 2022-2023. The excess amount is $2.6 billion.

What to do? Instead of lowering gasoline taxes, which the super-majority has already refused to do, a proposed $400 rebate for car owners makes more sense.

Don’t think that Gov. Newsom is being Santa Claus because he is magnanimous. He’s doing it because he has the option to refund excess revenues back to the taxpayers, which is a remedy when this ceiling is hit.

He knows this is a much better technique for calming the masses and looking like a benevolent candidate who wants to be reelected in November.

Besides, he’s learned from a critical mistake made by former Gov. Gray Davis. When Gov. Davis had a similar Stata Appropriations Limit issue, he reduced the Vehicle License Fee for all car owners. When tax revenues declined shortly thereafter, he raised the annual DMV renewal fee back to prior levels.

What happened? Enough registered voters signed recall petitions that resulted in Davis being the second governor in United States history to be recalled.

How to kill two birds with one stone? The governor’s press release title of March 23rd says it all, “Governor Newsom Proposes Relief Package for Californians Facing Higher Gas Prices.” Brilliant.

Newsom didn’t blame the state’s taxes, making gasoline the most expensive here in California than any other state. He didn’t mention President Biden’s mismanagement of the economy and the attack by Russia on Ukraine. He found a perfect but unjustified scapegoat. “As oil and gas companies continue to rake in record profits, Newsom unveiled his proposal to deliver relief to Californians facing record-high gas prices.”

Why does it feel like a thief is returning your wallet? But with most of the money removed from it?

The super-majority is not reducing your gas tax. You may receive a one-time payment to salve your anger. Newsom will be reelected. And the nonsense of high taxes will continue for the next four or more years. Enjoy the sugar high. But be prepared for the sad and expensive reality your future holds.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.